what's your number?? (for married couples)
what's your number?? (for married couples)
when trying to calculate our "number" for retirement, i get wildly different answers from half a dozen different calculators, ranging from 3.5mil to 15mil.
i know that this depends on many variables, including desired monthly retirement income, geography, and single vs married vs no kids vs 5 kids etc etc etc. however, i'd just like to get a sense of reasonable figures for a married couple who plans to live a liberal middle class lifestyle for ~30 years after retirement, i.e. retiring somewhat earlier, and living somewhat less frugally.
i'm thinking it's in the 5-7 million range, but the answers in the 10-15million range scare me!
i know that this depends on many variables, including desired monthly retirement income, geography, and single vs married vs no kids vs 5 kids etc etc etc. however, i'd just like to get a sense of reasonable figures for a married couple who plans to live a liberal middle class lifestyle for ~30 years after retirement, i.e. retiring somewhat earlier, and living somewhat less frugally.
i'm thinking it's in the 5-7 million range, but the answers in the 10-15million range scare me!
between scotch and nothing, i'll take scotch. -- faulkner
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Re: what's your number?? (for married couples)
The big question is WHEN?
This year, 10 years from now or 30 years from now?
The numbers will vary considerably due to inflation.
If you are retiring at age 60 this year (2014), I think a couple could squeeze by on $3M tax-sheltered.
This assume that a taxable $150K per year would be sufficient, eventually including near-maximal SS at age 70.
You might want to annuitize a portion of that $3M to get higher monthly payout...
This year, 10 years from now or 30 years from now?
The numbers will vary considerably due to inflation.
If you are retiring at age 60 this year (2014), I think a couple could squeeze by on $3M tax-sheltered.
This assume that a taxable $150K per year would be sufficient, eventually including near-maximal SS at age 70.
You might want to annuitize a portion of that $3M to get higher monthly payout...
Last edited by The Wizard on Wed Feb 26, 2014 2:06 pm, edited 2 times in total.
Attempted new signature...
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Re: what's your number?? (for married couples)
Mine is 2.75% of whatever my yearly expenses are.
Assuming that the house is paid-off (which it should be), I'm currently projecting yearly expenses to be no more than $45K, so $1.65 million should be sufficient.
ETA: The $1.65 million amount would be wholly within my taxable account. Anything in my IRAs would not be counted other than as a buffer.
Assuming that the house is paid-off (which it should be), I'm currently projecting yearly expenses to be no more than $45K, so $1.65 million should be sufficient.
ETA: The $1.65 million amount would be wholly within my taxable account. Anything in my IRAs would not be counted other than as a buffer.
Last edited by Random Poster on Wed Feb 26, 2014 2:09 pm, edited 1 time in total.
Re: what's your number?? (for married couples)
Assuming that you won't be carrying any debt into retirement, I think that $100K per year of income is more than comfortable.
So $3-5M in the initial retirement portfolio, depending on how early you retire.
Anything above that would be way out of the realm of middle class IMHO.
So $3-5M in the initial retirement portfolio, depending on how early you retire.
Anything above that would be way out of the realm of middle class IMHO.
Re: what's your number?? (for married couples)
For someone who is in their 60s today I think $2M (plus 2 x SS) should safely be "enough" to enjoy a very comfortable retirement (barring high expenses like a mortgage, first class airfare/world cruises, special needs child, etc).ERMD wrote:i'm thinking it's in the 5-7 million range, but the answers in the 10-15million range scare me!
Tens of millions of people will retire with much, much less.
If there is hyperinflation you will have to hope stock market and salary will come close to keeping up.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: what's your number?? (for married couples)
Figure out your expenses in retirement (if you're in your 40s or 50s, it will likely be very close to the same as right now), add an extra $1000/month to give you a buffer for anything you forgot and multiply by 25-30. (And then again by 1.03^<number of years until you retire> to account for inflation)
Note, I didn't say income... figure out your expenses... look at your bills.
If you spend $9000 a month now, and that includes a $2000 mortgage payment... then just start with $7000 a month in retirement, assuming you'll have your house paid off by then (Note that you can only subtract the mortgage payment, not the insurance and property taxes part)
Then add another $1000 a month for a buffer...
That puts you at $8000 a month... $96,000 a year... or about $2.5 million (that's today's dollars - in 20 years if we see 3% inflation, that will be $4.5 million)
Now you can ignore SS, and count it as an extra buffer, or use it to reduce your number... Say you're going to get $2000/month from SS... So now you're investments only need to generate $6000 a month... or $72,000 a year... So now you're number is about $2 million (in today's dollars - in 20 years that will be $3.6 million)
Of course, inflation may not be 3% and your expenses may change... so you have to revisit this and redo calculations as you get older.
Note, I didn't say income... figure out your expenses... look at your bills.
If you spend $9000 a month now, and that includes a $2000 mortgage payment... then just start with $7000 a month in retirement, assuming you'll have your house paid off by then (Note that you can only subtract the mortgage payment, not the insurance and property taxes part)
Then add another $1000 a month for a buffer...
That puts you at $8000 a month... $96,000 a year... or about $2.5 million (that's today's dollars - in 20 years if we see 3% inflation, that will be $4.5 million)
Now you can ignore SS, and count it as an extra buffer, or use it to reduce your number... Say you're going to get $2000/month from SS... So now you're investments only need to generate $6000 a month... or $72,000 a year... So now you're number is about $2 million (in today's dollars - in 20 years that will be $3.6 million)
Of course, inflation may not be 3% and your expenses may change... so you have to revisit this and redo calculations as you get older.
Last edited by HomerJ on Wed Feb 26, 2014 2:12 pm, edited 1 time in total.
Re: what's your number?? (for married couples)
Thousands of millionsstan1 wrote:For someone who is in their 60s today I think $2M (plus 2 x SS) should safely be "enough" to enjoy a very comfortable retirement (barring high expenses like a mortgage, first class airfare/world cruises, special needs child, etc).ERMD wrote:i'm thinking it's in the 5-7 million range, but the answers in the 10-15million range scare me!
Tens of millions of people will retire with much, much less.
If there is hyperinflation you will have to hope stock market and salary will come close to keeping up.
Re: what's your number?? (for married couples)
30X what i want to withdraw annually.
Higher risk = higher HOPEFUL returns, not expected returns.
Re: what's your number?? (for married couples)
Anything decades before retirement is just an estimation, but here's one possible exercise to help come up with some sort of "number"...
1. Go to http://www.firecalc.com/ which if you're not familiar, is a retirement calculator that shows you how a particular portfolio would have performed over the various investments cycles in the past for which we have historical data. The future will be different from the past, of course, but I like that this calculator at least plugs your input numbers into how the markets actually behaved.
2. Enter your combined info not just in the three boxes on the front page, but also on the other tabs. In particular, be certain not to miss the Not Retired tab, where you enter a retirement year and a contribution amount per year. (I like to be optimistic and input the numbers as if we're both going to live until I'm 100. Who knows, it could happen. )
3. Play around with the contribution amount until you get firecalc reporting that such a plan would just barely have had 100% success over all the possible cycles. (In other words, the lowest colored line on the chart would end just barely above the horizontal red line.)
4. On the Investigate tab, check the box to output a spreadsheet and run that last firecalc calculation again.
5. On the resulting spreadsheet, examine closely the column for the year you expect to retire. Sort the records based on that column. I would say, if you really want to come up with a "number," the lowest number in that column would be as good of an estimation as any.
1. Go to http://www.firecalc.com/ which if you're not familiar, is a retirement calculator that shows you how a particular portfolio would have performed over the various investments cycles in the past for which we have historical data. The future will be different from the past, of course, but I like that this calculator at least plugs your input numbers into how the markets actually behaved.
2. Enter your combined info not just in the three boxes on the front page, but also on the other tabs. In particular, be certain not to miss the Not Retired tab, where you enter a retirement year and a contribution amount per year. (I like to be optimistic and input the numbers as if we're both going to live until I'm 100. Who knows, it could happen. )
3. Play around with the contribution amount until you get firecalc reporting that such a plan would just barely have had 100% success over all the possible cycles. (In other words, the lowest colored line on the chart would end just barely above the horizontal red line.)
4. On the Investigate tab, check the box to output a spreadsheet and run that last firecalc calculation again.
5. On the resulting spreadsheet, examine closely the column for the year you expect to retire. Sort the records based on that column. I would say, if you really want to come up with a "number," the lowest number in that column would be as good of an estimation as any.
Re: what's your number?? (for married couples)
$1.45 million to retire at 42 with estimated $100-110k in annual expenses. This is with a significant pension, however. Without that pension, to make the same math work, I calculated roughly $5 million (again, to retire at 42). Ran those numbers using FireCalc, assumed zero Social Security input, and was willing to accept 95% "pass".
Edited:
I liked the "process" post below, so here's how I got mine:
- Entering argument: At what age do I want to retire? For me, I picked 42 since that's when I will be pension-eligible. It could be 50 since I may work longer, but I wanted to know my number to be FI at the point when I don't HAVE to work any longer (for benefit purposes).
- Firecalc
- Estimated expenses looking at today's spending and adjusting things like fuel costs (down), travel costs (up), and assumed I would have either a mortgage or rent payment. (As I plan to retire early, I am not planning on paying off whatever I own before that date... at some point, I'll have a payment to make).
- Estimated one-time expenses for cars and kid's college in Firecalc using single withdrawals.
- Put my COLA'ed pension in there...
- Estimated my expenses and returns based on my asset allocation and actual annual investment expenses (which are lower than FIRECALC's 0.18 default).
- Ignored SS (for conservative estimate)
- Assumed I'd live to 95. Oldest grandparent was 92 when she died, parents both still alive at 80/73 respectively. I feel like 95 is pretty conservative... this means my portfolio/plan has to last 53 years.
- Tweaked some other numbers for multiple "runs" through Firecalc.
Then I just played with the "big" number on the first page until I got at least 95%... came up with $1.4 - 1.5 million (again, recall I have a significant, COLA'd pension).
So I guess I started with the answer and worked backwards to the question... I have the following needs and information, is $____________________ enough?
I stopped when I felt the answer was "yes". The question is, what will make YOU say "yes"?
Edited:
I liked the "process" post below, so here's how I got mine:
- Entering argument: At what age do I want to retire? For me, I picked 42 since that's when I will be pension-eligible. It could be 50 since I may work longer, but I wanted to know my number to be FI at the point when I don't HAVE to work any longer (for benefit purposes).
- Firecalc
- Estimated expenses looking at today's spending and adjusting things like fuel costs (down), travel costs (up), and assumed I would have either a mortgage or rent payment. (As I plan to retire early, I am not planning on paying off whatever I own before that date... at some point, I'll have a payment to make).
- Estimated one-time expenses for cars and kid's college in Firecalc using single withdrawals.
- Put my COLA'ed pension in there...
- Estimated my expenses and returns based on my asset allocation and actual annual investment expenses (which are lower than FIRECALC's 0.18 default).
- Ignored SS (for conservative estimate)
- Assumed I'd live to 95. Oldest grandparent was 92 when she died, parents both still alive at 80/73 respectively. I feel like 95 is pretty conservative... this means my portfolio/plan has to last 53 years.
- Tweaked some other numbers for multiple "runs" through Firecalc.
Then I just played with the "big" number on the first page until I got at least 95%... came up with $1.4 - 1.5 million (again, recall I have a significant, COLA'd pension).
So I guess I started with the answer and worked backwards to the question... I have the following needs and information, is $____________________ enough?
I stopped when I felt the answer was "yes". The question is, what will make YOU say "yes"?
Last edited by nash031 on Wed Feb 26, 2014 2:41 pm, edited 2 times in total.
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Re: what's your number?? (for married couples)
The process I use to get a "number" is pretty straightforward.
Your "number" has a pretty big potential range, depending on the guesses you make.
- First, I estimate what our yearly expenses would be in retirement, in today's dollars:
- I assume that the home is paid off, so there's no mortgage expense
- Since we're "in retirement", I don't count retirement savings as a expense, of course
- Work-related expenses (gas, lunches, etc.) would go away, but some home expenses (groceries, heating/cooling/water, etc.) might go up
- Everything else is ballparked based on current expenses, with a bit more added in for vacations and medical costs
- Then I adjust that figure for however many years of inflation:
- Retirement age - current age = number of years of inflation
- I use Excel's FV function, estimating a 3% inflation rate
- If you wish, you may subtract what, if anything, you expect to get from Social Security by then.
- Figure out how big pile your pile of money needs to be to generate that yearly expense at a safe withdrawl rate
- Multiply by 25 if you plan on a 4% SWR
- Multiply by 20 if you plan on 5%
Your "number" has a pretty big potential range, depending on the guesses you make.
"Stay on target! Stay on target!"
Re: what's your number?? (for married couples)
that was sort of my point. i wanted to see the average of people's examples.JupiterJones wrote:The process I use to get a "number" is pretty straightforward.
So you see that there's a lot of uncertainty here. Who really knows what their expenses will be in retirement? Or what inflation will be? Or what a safe withdrawl rate will be by then?
Your "number" has a pretty big potential range, depending on the guesses you make.
between scotch and nothing, i'll take scotch. -- faulkner
Re: what's your number?? (for married couples)
Everyone's number is going to be completely different based off of their lifestyle. As a multiply I'd like to have at least a minimum of 25 times expenses that won't be paid by social security or my pension saved up. A little cushion above that would be nice.
If my anticipated expenses above my pension and other income is only $20,000 then $500,000 would be the minimum that I would want. In my mid 30's right now, I don't really know what my expenses will be in retirement, so I save what I can.
If my anticipated expenses above my pension and other income is only $20,000 then $500,000 would be the minimum that I would want. In my mid 30's right now, I don't really know what my expenses will be in retirement, so I save what I can.
Never underestimate the power of the force of low cost index funds.
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Re: what's your number?? (for married couples)
Get multiple children through college over the next 15-20 years debt-free and your goal will be VERY daunting. If you area accustomed to a comfortable lifestyle with earned income and you want to maintain that lifestyle, your number will also be daunting. If you can live somewhat simplistically below your means and save a high percentage of your income for many years, you will be fine. Earned income is very difficult to replace with savings. Stay healthy.
Re: what's your number?? (for married couples)
i agree with you to an extent, although honestly, 150 a month into a 529 plan per child gives you close to 80k when they're going off to college. that will be enough to pay most of 4 years at a state school. if they want to go private, they can take out loans for the remainder like i did.goodenyou wrote:Get multiple children through college over the next 15-20 years debt-free and your goal will be VERY daunting. If you area accustomed to a comfortable lifestyle with earned income and you want to maintain that lifestyle, your number will also be daunting. If you can live somewhat simplistically below your means and save a high percentage of your income for many years, you will be fine. Earned income is very difficult to replace with savings. Stay healthy.
between scotch and nothing, i'll take scotch. -- faulkner
Re: what's your number?? (for married couples)
Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
Re: what's your number?? (for married couples)
Yeah, if the house is paid off, it really doesn't cost that much for the basics... Food, electricity, heat, cable, and Internet just isn't that expensive.john94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
I plan to live on a lake in the Mid-west with a boat and a dock, and cold beer in the cooler. That is a pretty good life, and with the house paid off, we could get by on $4000 a month easy if we never went anywhere...
Since we'll get that much from SS alone, I think we're in pretty good shape... We're pretty much only saving for health care, and travel, and retiring before SS kicks in...
Re: what's your number?? (for married couples)
35 years ago when I started out after school, I developed a very simple spreadsheet (in Lotus 123) and calculated that I needed 25x my spending in order to retire comfortably with relatively low risk. I now have 25 times my annual spending (which won't change much in retirement) and I will be retiring in a year or two.ERMD wrote:when trying to calculate our "number" for retirement, i get wildly different answers from half a dozen different calculators, ranging from 3.5mil to 15mil.
i know that this depends on many variables, including desired monthly retirement income, geography, and single vs married vs no kids vs 5 kids etc etc etc. however, i'd just like to get a sense of reasonable figures for a married couple who plans to live a liberal middle class lifestyle for ~30 years after retirement, i.e. retiring somewhat earlier, and living somewhat less frugally.
i'm thinking it's in the 5-7 million range, but the answers in the 10-15million range scare me!
The math is very simple, and it doesn't matter whether your annual income is $40,000 or $400,000 or $4,000,000
Best wishes.
Andy
Re: what's your number?? (for married couples)
Wagnerjb wrote:spreadsheet (in Lotus 123)
Ahhh...I miss those days.
Re: what's your number?? (for married couples)
35 years ago you were probably using Visicalc, which was launched 35 years ago in 1979. 123 was launched five years later.Wagnerjb wrote:35 years ago when I started out after school, I developed a very simple spreadsheet (in Lotus 123) and calculated that I needed 25x my spending in order to retire comfortably with relatively low risk. I now have 25 times my annual spending (which won't change much in retirement) and I will be retiring in a year or two.
The math is very simple, and it doesn't matter whether your annual income is $40,000 or $400,000 or $4,000,000
Best wishes.
Re: what's your number?? (for married couples)
Consider the cost of a nice vacation for two http://www.nationalgeographicexpedition ... our/detailjohn94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
Re: what's your number?? (for married couples)
You need to re-evaluate this. First, you are assuming an almost 10% return to get to that $80k, which I think most people would find unreasonably high. Second, $80k will pay for most of 3 years at a state school NOW, but 18 years from now it will be closer to double that.ERMD wrote: 150 a month into a 529 plan per child gives you close to 80k when they're going off to college. that will be enough to pay most of 4 years at a state school. if they want to go private, they can take out loans for the remainder like i did.
2013-2014 cost of college (in-state)
Univ of California - $32,415
Univ of Texas - $27,096
Univ of Michigan - $27,910
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Re: what's your number?? (for married couples)
I get the point - in this world, it's very easy to spend money if you have it. Vacations, second homes, luxury cars, better end-of-life care - the money can be spent quickly.richard wrote:Consider the cost of a nice vacation for two http://www.nationalgeographicexpedition ... our/detailjohn94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
But with so much time in the air (even on a private jet) over such a short period of time, and only 1-2 days in each magical place, that particular trip doesn't sound very nice to me.
Re: what's your number?? (for married couples)
I think visiting those sites with National Geographic scholars/historians as your guides would be amazing...NoVa Lurker wrote:I get the point - in this world, it's very easy to spend money if you have it. Vacations, second homes, luxury cars, better end-of-life care - the money can be spent quickly.richard wrote:Consider the cost of a nice vacation for two http://www.nationalgeographicexpedition ... our/detailjohn94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
But with so much time in the air (even on a private jet) over such a short period of time, and only 1-2 days in each magical place, that particular trip doesn't sound very nice to me.
And that jet has been retro-fitted to be 100% first-class, and lie-down beds... (instead of 233 normal seats, instead it has 77 VIP seats)
I'd love to do that trip if I had the money.
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Re: what's your number?? (for married couples)
I'm 41 and would like to retire in my mid 60's. The ballpark number in my head is $5 million, with the house paid off and the kids through college at that time.
Re: what's your number?? (for married couples)
32 and 27. would like to retire when I'm 65. Targetting 8 million.
Re: what's your number?? (for married couples)
I bet when you hit 60, and already have 6 million, you might start thinking if 5 more years of your life is worth the extra money.amoeba wrote:32 and 27. would like to retire when I'm 65. Targetting 8 million.
Re: what's your number?? (for married couples)
If you are thinking of 5-7M, I would first make an estimate based on an assumption you were retiring today and then figure the amount needed when you actually retire by using inflation projections. Your number will very depending on where you live, of course, and you might consider whether you would move (or be willing to move) to an area other than where you are now and make projections based on the cost of living where you expect to live. Other factors will also influence your number such as whether you will have social security, what amount you project it to be, and whether you think it will be available when you retire. If you have a pension, as opposed to another retirement plan, is another consideration, as is whether or not income sources in retirement are pegged to inflation and whether your projected job at retirement will provide continuing healthcare coverage after retirement. Though many of these things are projections, that is what we did, making our eventual number based on the most conservative of these projections. For example, that all income would be taxed, that social security would be 1/2 of projections and that pension income would not be pegged to inflation.
We live a very nice lifestyle in retirement in a low cost state with no income tax other than on interest/dividends above $1,500 annually (Tennessee), and our number has been exceeded by following the above approach.
Tim
We live a very nice lifestyle in retirement in a low cost state with no income tax other than on interest/dividends above $1,500 annually (Tennessee), and our number has been exceeded by following the above approach.
Tim
Re: what's your number?? (for married couples)
"vary" for "very."
Oops!
Oops!
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Re: what's your number?? (for married couples)
We're the same age, but if we had 5 million we'd probably both retire now (at the very least she'd stop working). Then again we are very frugal, even by Boglehead standards, our entire cost of living last year was ~$20k.amoeba wrote:32 and 27. would like to retire when I'm 65. Targetting 8 million.
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Re: what's your number?? (for married couples)
HomerJ wrote:I bet when you hit 60, and already have 6 million, you might start thinking if 5 more years of your life is worth the extra money.amoeba wrote:32 and 27. would like to retire when I'm 65. Targetting 8 million.
Agree completely, time is far more valuable than money.
RM
I figure the odds be fifty-fifty I just might have something to say. FZ
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Re: what's your number?? (for married couples)
Agreed. I can think of many better ways to spend $150K.NoVa Lurker wrote:I get the point - in this world, it's very easy to spend money if you have it. Vacations, second homes, luxury cars, better end-of-life care - the money can be spent quickly.richard wrote:Consider the cost of a nice vacation for two http://www.nationalgeographicexpedition ... our/detailjohn94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
But with so much time in the air (even on a private jet) over such a short period of time, and only 1-2 days in each magical place, that particular trip doesn't sound very nice to me.
In theory, theory and practice are identical. In practice, they often differ.
Re: what's your number?? (for married couples)
Step one: ignore inflation.
Expenses now at $23K / yr for family of 3 (Midwest). So, current lifestyle with a paid-off house might be about that for a very simple lifestyle (I have MMM tendencies). Make it $28K to be safe. Multiply by 25 (4% withdrawal rate) = $700K.
But there are too many factors three decades out:
*Wouldn't be surprised if I develop less frugal tastes. I spend very little on vacations now.
*Will social security be there?
*Will healthcare continue to be subsidized to low-income people?
*Will I have an inheritance? Likely, but I hope my folks live to see me retire, my kids graduate college, etc, so my plan assumes $0.
As a consequence, we just try to keep a high savings rate, follow Bogleheads principles, and enjoy life.
Expenses now at $23K / yr for family of 3 (Midwest). So, current lifestyle with a paid-off house might be about that for a very simple lifestyle (I have MMM tendencies). Make it $28K to be safe. Multiply by 25 (4% withdrawal rate) = $700K.
But there are too many factors three decades out:
*Wouldn't be surprised if I develop less frugal tastes. I spend very little on vacations now.
*Will social security be there?
*Will healthcare continue to be subsidized to low-income people?
*Will I have an inheritance? Likely, but I hope my folks live to see me retire, my kids graduate college, etc, so my plan assumes $0.
As a consequence, we just try to keep a high savings rate, follow Bogleheads principles, and enjoy life.
A thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise. -Aldo Leopold's Golden Rule of Ecology
Re: what's your number?? (for married couples)
3.5 million tax deferred, hopefully another 1 to 1.5 million in taxable or roth and 200K to 400K in HSA. Retirement hopefully in ~ 20 years we picked that timeline because we want to retire early (54-55) and:
#1 The youngest will just have graduated college
#2 House should be paid off
Our base living expenses should be around 40K in today's dollars, combination of deferred income annuities, investments and social security should provide 3x or more our base expenses. We'll take SS at either full retirement age or 70, even at 80% of expected benefits SS will exceed our base living expenses.
Definately consider SPIAS or deferred income annuities (delayed SPIAs) to help address the risk of running out of money. Properly done SPIAs provide a higher spend rate than an investment portfolio and contractually last until you die, you can purchase a guaranteed payment term for very little which will make sure they at least pay out principal to your heirs if you die early.
#1 The youngest will just have graduated college
#2 House should be paid off
Our base living expenses should be around 40K in today's dollars, combination of deferred income annuities, investments and social security should provide 3x or more our base expenses. We'll take SS at either full retirement age or 70, even at 80% of expected benefits SS will exceed our base living expenses.
Definately consider SPIAS or deferred income annuities (delayed SPIAs) to help address the risk of running out of money. Properly done SPIAs provide a higher spend rate than an investment portfolio and contractually last until you die, you can purchase a guaranteed payment term for very little which will make sure they at least pay out principal to your heirs if you die early.
Re: what's your number?? (for married couples)
Anything over 2 million would make me and my wife feel pretty comfortable. The more the better.
Re: what's your number?? (for married couples)
With all due respect, this doesn't make any sense. You have an idea of your base income need and you know you have three times the income to meet that and more than enough in SS alone to cover it after age 70. I would have to ask what else you might be planning to spend money on, or, in other words, are you really thinking seriously about what you want to spend? I think this philosophy that's out there about baseline need and "discretionary" spending might be misleading people about what they really want to do with their money in retirement. I don't think it is anything at all simple to separate "necessary" and "discretionary" spending. A different view of this is that if $40K is all you really need, why wait so long to retire, college and house notwithstanding? But I bet you don't really think you can retire on $40K/year.Quickfoot wrote:3.5 million tax deferred, hopefully another 1 to 1.5 million in taxable or roth and 200K to 400K in HSA. Retirement hopefully in ~ 20 years we picked that timeline because we want to retire early (54-55) and:
#1 The youngest will just have graduated college
#2 House should be paid off
Our base living expenses should be around 40K in today's dollars, combination of deferred income annuities, investments and social security should provide 3x or more our base expenses. We'll take SS at either full retirement age or 70, even at 80% of expected benefits SS will exceed our base living expenses.
Definately consider SPIAS or deferred income annuities (delayed SPIAs) to help address the risk of running out of money. Properly done SPIAs provide a higher spend rate than an investment portfolio and contractually last until you die, you can purchase a guaranteed payment term for very little which will make sure they at least pay out principal to your heirs if you die early.
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Re: what's your number?? (for married couples)
It makes a lot of sense, even if we don't know what Quickfoot's expensive time-consuming "hobbies" are.dbr wrote:
With all due respect, this doesn't make any sense. You have an idea of your base income need and you know you have three times the income to meet that and more than enough in SS alone to cover it after age 70. I would have to ask what else you might be planning to spend money on, or, in other words, are you really thinking seriously about what you want to spend? I think this philosophy that's out there about baseline need and "discretionary" spending might be misleading people about what they really want to do with their money in retirement. I don't think it is anything at all simple to separate "necessary" and "discretionary" spending. A different view of this is that if $40K is all you really need, why wait so long to retire, college and house notwithstanding? But I bet you don't really think you can retire on $40K/year.
Once you have 52 weeks a year to do stuff with, you'll find it takes extra cash to go to Italy or Costa Rica for a couple weeks.
So in a manner similar to your working years, Live Beneath Your Means in retirement at the base level. And connive fun ways to deal with excess retirement income...
Attempted new signature...
Re: what's your number?? (for married couples)
Roughly (years of retirement) * (annual expenses), in real dollars.
Re: what's your number?? (for married couples)
sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.buckstar wrote:You need to re-evaluate this. First, you are assuming an almost 10% return to get to that $80k, which I think most people would find unreasonably high. Second, $80k will pay for most of 3 years at a state school NOW, but 18 years from now it will be closer to double that.ERMD wrote: 150 a month into a 529 plan per child gives you close to 80k when they're going off to college. that will be enough to pay most of 4 years at a state school. if they want to go private, they can take out loans for the remainder like i did.
2013-2014 cost of college (in-state)
Univ of California - $32,415
Univ of Texas - $27,096
Univ of Michigan - $27,910
between scotch and nothing, i'll take scotch. -- faulkner
Re: what's your number?? (for married couples)
Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
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Re: what's your number?? (for married couples)
john94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
I would think the same thing. My wife thinks the same thing, I asked her once, How do we spend $10k per month? She laughed, and said, "We could never spend $10k per month!"john94549 wrote:Even here in "high-cost" California, with one's mortgage paid off, and Social Security with a COLA and all that, it's really hard to spend more than $120K/annum after-tax. I asked the wife the other day: "could you make it on $10K/mo, after tax?" She laughed.
For us, the math is simple. After pension, S/S, interest and dividend income, the withdrawal rate from our tax-deferred accounts will be a tad below 3.5%. That gives us the magical $10K/mo after-tax.
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Re: what's your number?? (for married couples)
3.5 Million. Wife and I are 27.
I know this will likely not offer a lavish lifestyle, but an annual income approaching $75k in today's dollars retiring at 62 would be great.
I know this will likely not offer a lavish lifestyle, but an annual income approaching $75k in today's dollars retiring at 62 would be great.
Re: what's your number?? (for married couples)
this is obviously an unsustainable growth rate. i'm not sure anyone thinks the average college tuition will be one million dollars for 4 years 30 years from now, using some of the examples above.feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
between scotch and nothing, i'll take scotch. -- faulkner
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Re: what's your number?? (for married couples)
Do trees grow to the sky forever?feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: what's your number?? (for married couples)
If unlimited amounts of student loan debt are available, I think that is quite likely, since in that case there would be nothing to stop the geometric progression.ERMD wrote:this is obviously an unsustainable growth rate. i'm not sure anyone thinks the average college tuition will be one million dollars for 4 years 30 years from now, using some of the examples above.feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
In theory, theory and practice are identical. In practice, they often differ.
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Re: what's your number?? (for married couples)
My college educator friends think it's perfectly appropriate to charge $58K at a second tier private institution offering degrees in athletics, anthropology and medievil history. They also think that tuition will cost $400K in 20 years and the mass population will pay any price for it. We are already seeing signs of what they believed is a "price inelastic" product to be more "price elastic" then their official brochures indicate. You can charge any price you want, but first you must have someone pay it before you can receive it.ERMD wrote:this is obviously an unsustainable growth rate. i'm not sure anyone thinks the average college tuition will be one million dollars for 4 years 30 years from now, using some of the examples above.feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: what's your number?? (for married couples)
That would make the 2008/2009 financial debacle look like a cakewalk. People will never learn, will they?technovelist wrote:If unlimited amounts of student loan debt are available, I think that is quite likely, since in that case there would be nothing to stop the geometric progression.ERMD wrote:this is obviously an unsustainable growth rate. i'm not sure anyone thinks the average college tuition will be one million dollars for 4 years 30 years from now, using some of the examples above.feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: what's your number?? (for married couples)
Wife and I are both 29. Targeting $10 million for retirement or if we hit 60 we'll pull the plug and adjust to whatever the number is.
We spend alot (about 90k a year now, we have a big mortgage payment and we travel a ton).
We save about 25% of income strictly for retirement and have been doing so ever since undergrad.
I have no idea how good a guess $10M is. i'd rather aim high and come up short then plan for something that may be insufficient. I keep close tabs on our finances so if we get off track or our estimation of our needs prove incorrect I'll at least know right away.
i figure I can't do much more than a wild guess until i hit about 50 or so anyway. Will continue to monitor the situation and just save as much as I can while enjoying the here and now a little bit.
We spend alot (about 90k a year now, we have a big mortgage payment and we travel a ton).
We save about 25% of income strictly for retirement and have been doing so ever since undergrad.
I have no idea how good a guess $10M is. i'd rather aim high and come up short then plan for something that may be insufficient. I keep close tabs on our finances so if we get off track or our estimation of our needs prove incorrect I'll at least know right away.
i figure I can't do much more than a wild guess until i hit about 50 or so anyway. Will continue to monitor the situation and just save as much as I can while enjoying the here and now a little bit.
Re: what's your number?? (for married couples)
I'm not suggesting it will continue at that rate. However, I do think it will more than double over the next 18 years.ERMD wrote:this is obviously an unsustainable growth rate. i'm not sure anyone thinks the average college tuition will be one million dollars for 4 years 30 years from now, using some of the examples above.feh wrote:Over the last 20 years, the cost of college education has been doubling every 10 years; average increase per year roughly 7%.ERMD wrote: sorry, my math was a bit off. at 8%, you'll finish with 72k in 18 years. you're also right that i need to re-adjust a bit, maybe $250 a month. but the SUNY schools right now are ~88k for 4 years. 250 a month at 8% gives me 120k. so even if the tuition literally doubles (and it probably won't be THAT much more expensive in 18 years), the 529 plan would be enough for 3 of 4 years.
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Re: what's your number?? (for married couples)
I'm targeting $250 Billion. I mean, if you're going to shoot for something, might as well aim HIGH!!
I figure, if college tuition will cost $1 million in 30 years, my retirement will cost hundreds of multiples of that since my utility bill may cost me $50K per year, food will be equally expensive, cars will cost $2 million and that is just for an entry level bare bones flying saucer model.
And we certainly budget for healthcare expenses, as most prognosticators are telling us that we need at least $250K for medical expenses today, well gosh! that means medical expenses may cost the average retired couple no less than $2 million. Add up all these nickels and dimes and now we're talking real money.
Yep, not a penny less than $250 Billion.
I figure, if college tuition will cost $1 million in 30 years, my retirement will cost hundreds of multiples of that since my utility bill may cost me $50K per year, food will be equally expensive, cars will cost $2 million and that is just for an entry level bare bones flying saucer model.
And we certainly budget for healthcare expenses, as most prognosticators are telling us that we need at least $250K for medical expenses today, well gosh! that means medical expenses may cost the average retired couple no less than $2 million. Add up all these nickels and dimes and now we're talking real money.
Yep, not a penny less than $250 Billion.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions